Banking Sector Development in Ghana for the Period 1989 to 2010

David Kwashie Garr


The aim of this paper is to examine the development of the banking sector in Ghana over the past 22 years. To achieve this, an attempt is made to trace the growth and increase in the number of commercial banks in Ghana over the period. This paper has classified banks into two categories-local and foreign. It attempts to find out the extent to which they find the Ghanaian market attractive thereby enhancing competition in the industry. The two groups are compared with each other to determine their efficiency which is measured in terms of share of customer deposit, share of total assets of the industry, share of Gross loans, share of Government securities, share of loan loss provision, share of profit and return on assets. Finally, the paper  examines the extent of financial deepening of the banking sector by analysing the following financial deepening indicators:  ratio of bank asset to GDP, ratio of money supply to GDP, ratio of currency in circulation to money supply, credit to the private sector as a percentage of gross loans, government securities as a percentage of gross loans, and profit as a percentage of GDP. The result is that financial deepening  in Ghana has improved but not to the extent of removing the imperfections.

Keywords:Development, Growth, commercial bank, financial deepening, local banks. foreign banks

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